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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Alexander Pavlov who wrote (8220)	5/3/1998 11:02:00 PM
From: Joey Two-Cents	Respond to of 18691

<Yes, I feel about DELL in the same way, i.e. correction within next 6 months. But Jan-99 70 puts are 6 3/4, while Jan-00 70 puts are 11 1/2 (ask prices).> Alexander, I feel that the additional time horizon is well worth the premium. Nothing is more frustrating then to see your put option expire worthless right before the stock plummets. I don't believe we will see the market selloff until late 3rd or early 4th Q. This would leave a very short time frame to make your money. If you go with the longer expiration, you may not have as much leverage power but if the stock performs the way you feel it will perform you will still make money. Ex: If in 1/99 the price of DELL is 60 your Jan-99 puts are worth $ 10 or a profit of $ 3 1/4 (or around 50%). The Jan-00 70 puts would be worth at least $ 10, and considering the time premium, you could probably get at least as much (50%) as you did for your 99's. However if the market keeps going up past 1/00 than the 1/99's would have cost you 1/2 of what the 1/00 cost.